As balanced electron-rich P,C-chelating ligands, phosphine-phosphonium-ylides are considered for their ability to in situ promote palladium-catalysed direct C(sp2)—H arylation. Using methyl phosphonium salts of 2,2'-bis(diphenylphosphino)-1,1'-binaphtyl (“methyl-BINAPIUM”) as ylide precursors under optimized reaction conditions, arylation of benzoxazole was found to proceed in moderate to high yield to give functional 2-aryl benzoxazoles. A strong anion effect of the non-salt free ylide was evidenced(TfO- ＞ I-＞ PF6- ≈ salt-free). This first example of phosphonium ylides as ligands in catalytic C-H activation extends the prospect of their general implementation in homogeneous transition metal catalysis.